Models of donor coordination for managing multi-donor inputs

We are spearheading an international initiative that aims to strengthen the technical assistance provision structures for anti-money laundering and the combatting of illicit financial flows that are an important driver of international corruption. We wish to draw on
the experiences of donor coordination practices in providing technical assistance for anti-corruption purposes. What does the evidence of these practices tell us about which coordination structures are most effective for managing multi-donor inputs for delivering
technical assistance?

Caveats

This paper surveys forms of donor coordination to determine which are the most promising for development agencies looking to make headway against money laundering and illicit financial flows. It is worth nothing that these kind of anticorruption interventions remain the exception for most donors as the majority of aid-funded anticorruption programming continues to focus on bureaucratic and petty corruption, or seeks to strengthen civil society’s ability to hold governments to account. Targeting money laundering and illicit financial flows is likely to require very different, and as yet largely untested, forms of donor coordination which may require the prioritisation of reform at home over interventions abroad. Furthermore, while there is a sizeable literature on general donor coordination, the evidence base on coordination mechanisms in the anti-corruption field is limited. Where studies exist, they tend to either focus on joint donor support to public financial management reforms, or donors’ collective responses to corruption scandals in the country of operation, rather than dedicated anti-corruption interventions. Finally, there is little empirical evidence in terms of the transaction costs of donor coordination on governance issues.

Summary

Where the delivery of development assistance is fragmented and donor agencies’ activities lack coordination, transaction costs are likely to be exorbitant and the proliferation of parallel service delivery structures undermines both the efficacy and legitimacy of the recipient state’s institutions. In the area of anti-corruption, inconsistencies in donor approaches entail additional challenges, such as enabling recipient governments to jettison muchneeded governance reforms. Although experts have been calling for greater coordination between donors on anti-corruption work for over two decades, progress has been slow and considerable structural constraints remain. These barriers range from the prosaic – development agencies’ differing reporting and funding cycles – to the pathological – instinctive bureaucratic competition. This query surveys various modalities of donor coordination, grouped into three broad categories: funding, information sharing and international engagement. It then considers which forms of donor coordination lend themselves to initiatives designed to tackle sophisticated forms of corruption, such as money laundering and illicit financial flows. A review of the available literature suggests that coordination structures, such as multi-donor trust funds, may facilitate joint approaches in recipient countries, while information-sharing vehicles, such as the OECD’s Anti-Corruption Task Team, could foster high-level dialogue without fixating on the harmonisation of donors’ policies and procedures.